KUALA LUMPUR, Oct 1: Malaysian palm oil futures tumbled to the lowest in more than two years on Monday as investors fretted over rising stocks that may outpace slowing demand and the uncertain global economic outlook.
A cargo surveyor reported a dip in Malaysia’s September exports from a month ago, which could lead to further build up in stocks and further weigh on prices that have fallen by more than a fifth since the start of 2012.
‘The stocks—I think that is a major factor in the market that is worrying a lot of players,’ said a trader with a foreign commodities brokerage.
‘A lot of people expected exports for last month to be good, but the basic thing is the end-stocks is still growing higher. That’s the problem there. The stocks are not coming down.’
The benchmark December contract on the Bursa Malaysia Derivatives Exchange slid as much as 2.8 percent to 2,475 ringgit ($807) — the lowest since July 2010. By the midday break, the contract was trading at 2,487 ringgit per tonne.
Total traded volumes on Monday stood at 21,021 lots of 25 tonnes each, much higher than the usual 12,500 lots as traders hedged positions and booked profits in the wake of a bearish technical outlook.
Reuters market analyst Wang Tao said technicals showed palm oil would fall to 2,493 ringgit per tonne and any rebound will be limited to 2,579 ringgit.
‘There is position squaring and continued speculative selling combined with seasonal production pressure which lingers in the market,’ said a trader with a local commodities brokerage.
‘Any attempt to rally will be capped by selling pressure at key chart resistance areas,’ he added.
Palm oil’s demand-supply fundamentals looked weak.
Palm oil exports in September were weaker-than-expected, slipping 0.7 percent to 1,443,836 tonnes compared to 1,453,544 tonnes in August, cargo surveyor Intertek Testing Services said on Monday.
Another cargo surveyor, Societe Generale de Surveillance will issue its estimates later in the day.
Malaysia has been pushing out more crude palm oil shipments to curtail the rise in stocks that have hit a ten month high at 2.1 million tonnes. Industry analyst Dorab Mistry expects stocks to hit 3 million tonnes next year.
Brent crude fell below $112 per barrel on Monday, reflecting investor concerns a shaky global economy may hurt oil demand following fresh evidence of weakness in China and Japan as well as persistent worries about the debt-saddled euro zone.
U.S. Soyoil for December delivery eased 1.7 percent, giving up some of last session’s gains even though the U.S. Department of Agriculture report showed a smaller-than-expected drop in ending stocks.
The most active January 2013 soyoil contract on the Dalian Commodity Exchange was flat at 0.1 percent. Several Asian markets are closed for holidays on Monday, including China, Hong Kong and South Korea, keeping trade subdued. (AGENCIES)
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